Jeff Fairburn didn’t buckle when his chairman, as well as the head of Persimmon’s remuneration committee, resigned in December over his insistence on taking his £100m bonus in full. Nor did he waver in the media storm that followed. He’d make a donation to charity, he eventually conceded, but never got round to defining what he meant by a “very meaningful” sum.
Now a faint tinkle of common sense has penetrated Fairburn’s tin ear. The chief executive will take a cut in his share-based incentive windfall – to £75m, based on the current share price.
That is still a ridiculous reward for running a housebuilder in a market pumped up with “help-to-buy” steroids. The best that can said is that he has conceded, in effect, that there are times when it is wrong to insist on receiving every last penny of a contractual entitlement.
Even that interpretation, though, is generous. Fairburn – and finance director Mike Killoran and managing director Dave Jenkinson – probably aren’t acting out of a sense of doing the right thing. Rather, they will have read the newspapers and realised some of their shareholders are hopping mad.
It is hard to believe investors would have found the backbone to vote a director or two off the board at April’s annual meeting, but some of the language was robust. Fairburn’s bonus was “preposterous,” said Euan Stirling of Aberdeen Standard Investments, and his “insistence in extracting such a high proportion of the value that has been created is damaging, both financially and reputationally, to the company”.
A large majority of shareholders voted in favour of the incentive scheme back in 2012, as Persimmon has consistently pointed out. And the other parties to blame are the former chairman, Nicholas Wrigley, and the pay chief, Jonathan Davie, who failed to impose a cap on the maximum rewards. Housebuilding is notoriously cyclical and, after George Osborne launched help-to-buy, it became a doddle for the executives to meet their “stretching” performance targets.
Wrigley and Davie at least had the grace to resign out of embarrassment. Fairburn, Killoran and Jenkinson, however, have let this saga run and run. They have could have made today’s modest gesture in 2016 since the size of the bonuses was visible for at least 18 months before December’s first vesting.
Giving up a few quid now makes it look as if the sums have been be wrestled from their clammy hands. They will secure a more votes at the shareholder meeting, but Persimmon’s status as a home of executive greed is settled in concrete.